GBP/USD regains 1.3100 ahead of UK PM May’s speech

The GBP/USD pair is seen extending its post-NFP recovery into Europe, now gaining control back above 1.31 handle, as investors gear up for the UK PM May Theresa May’s speech scheduled later today.

GBP/USD: Will the pullback last?

The spot found support ahead of 1.30 handle post-NFP data on Friday, and from there embarked upon a recovery, with the bulls now heading towards 1.3150 barrier, following a break above 1.31 handle.

The renewed uptick seen in Cable is mainly driven by profit-booking, as markets seek to take profits on their GBP shorts ahead of the UK PM May’s speech, which is likely to emerge the key risk event for the pound today. In her speech in the House of Commons today, the UK PM Theresa May will urge both sides to show "flexibility" over Brexit.

Meanwhile, the demand for the USD remains on the back foot amid renewed geopolitical tensions surrounding the US and North Korea, while holiday-thinned trading will also leave the greenback largely subdued against its main competitors.

Further, the latest reports of the ONS expected to publish a correction on the inflation data later on Monday could exert more pressure on the BOE to hike rates, which would in turn be supportive for more upside in the GBP/USD pair.

GBP/USD Preferred Strategy

Haresh Menghani, Analyst at FXStreet noted: “The current pull-back might still be categorized as a short-covering bounce from near-term oversold conditions and seems more likely to fizzle out near 1.3135-40 horizontal resistance. However, a strong follow through buying interest has the potential to continue lifting the pair back towards reclaiming the 1.3200 handle. On the flip side, weakness back below 1.3075 level could drag the pair back towards 1.3050 intermediate support, which if broken would turn the pair vulnerable to accelerate the fall towards the key 1.30 psychological mark.”